CU Turns Down Tax Incentive, In Part, To Make Point
The $2-billion Randolph Brooks Federal Credit Union decided against asking for a tax incentive for which it was eligible, in part to show that credit unions do pay taxes and also to give back something to a city that helped it during construction.
"We felt that the banks lie about credit unions not paying taxes and we wanted to dramatically and emphatically make that point," said John Kelly, senior vice president for planning at Randolph, a credit union founded by active and retired military members now also serving some communities near San Antonio.
"We knew that the city was offering tax abatements and we made a decision that we wouldn't apply," Kelly said.
While he declined to estimate the amount that would have been saved, he said that it may have been "considerable," as the credit union built a 20-acre headquarters office where employment will eventually rise to more than 400 people.
"We are not worried about what the banks say. We are just aware that banks make this point," Kelly added.
He said that while the savings may have been "substantial" it would not have had "a material effect in the services" offered to its some 225,000 members, such as reducing loan rates or other benefits for members.
Besides, the burden of offering the incentive "would have eventually fallen on many of our members who already live in Live Oak," he added.
It was also important to give something in return to the city, he said.
Construction of the offices of the credit union, which were originally at Randolph Air Force base, went smoothly because "the city bent over backwards" and fully supported the project, he said.
Joseph Painter, city manager of the 11,000-population Live Oak, confirmed that Randolph "would have qualified" for an incentive but didn't ask for it.
He said it was difficult to estimate how much of a revenue loss the incentive could have represented for the city.
"The most obvious incentive would be a property tax because they don't generate sales tax. This is where a percentage of property tax is deferred for up to 10 years," he said.
He said that the city did all it could to help the project move.
"When you save construction-project time you save them money. For example when they needed and inspection they would call in the morning and we would get there in the afternoon," he said.
Making things easier "is an incentive we give to every business that comes to town. We try not to slow them up in any stage," Painter said.
Kelly said that it is not uncommon for credit unions to look at things with a broader perspective. A for-profit business may have instead considered "this would look good on my quarterly report," he said.